A Losing Bet: the Last Days of Comdex, Part 2

I hadn't planned on being at
Comdex this year.
Even though Comdex is still the biggest computer show in the
country (though not on Earth; that distinction belongs to
CeBIT in Germany), it had
dropped off my travel wish list by the early Nineties. My interest
was revived only for the several years
Linux
Business Expo was in existence. LBE was kind of a show
within a show. The Linux Journal crew had a
lot of good times there, but it turned out to be, like so many
other things in those days, a way for startups to burn VC money--to
"brand" themselves and all that.

But a few months ago I was approached by some of the folks at
Key3Media, the company that puts on the show, about participating
in a new Comdex feature--a
Great
Debate. The bait was terrific: somebody had to take on
Steve Ballmer of Microsoft. There might be a couple other people in
the debate, I was told; but it would probably be something of a
Microsoft vs. Linux thing. I was selected to hold up the Linux end
of the contest. How could I refuse?

Later they asked me to recommend other folks for my end of
the table, as they wanted to make it more of a panel and to make it
as interesting as possible. I suggested Aaron Swartz, then 15 (now
16), who describes
himself this way:

Key3 took him on. Later, Ballmer fell off and some other guys
came on. But I remained committed.
Gary
Beach, who sits atop the masthead of
CIO and other publications, was slated to
moderate the thing. Gary and I go back many years; I like
him.

To prepare us, Gary sent out an e-mail asking us to read an
October 2002
column
by Kevin Maney of USA Today. Here's
how it starts:

Passion for technology
wanes as industry's relevance fades

SCOTTSDALE, Ariz. -- Where did the technology industry go? I
came here looking for it, but it's disappeared. Poof. Gone.

The industry has been hurting for a couple of years now, but
suddenly tech is looking like a spectacular sand castle built
yesterday at low tide. Now all that's left are a couple little
mounds on the beach.

Gary specifically wanted us to respond to that last paragraph
and told us we'd need to be ready for that at the debate.

I was up first. There's a difference, I pointed out, between
how an industry makes its living and what that living is worth to
the stock market. Tech is fine by the first measure, even if it
looks tanked by the second. To illustrate my point, I told the
story of something I had learned at a party back at the height of
the dot-com boom, when I ran into a young guy I had met at earlier
parties. He was still in his twenties but a self-described "serial
entrepreneur", meaning he was a veteran of several startups. He was
with yet another hot new company and very excited about it. I asked
him what his company did for a living.

"We're an arms merchant to the portals industry", he
replied.

When I asked what that meant (portals are an industry?), the
guy replied with a torrent of generic marketing BS. Finally I asked
what I thought was a rude question: "How are sales?"

"They're great", the guy said. "We just closed our second
round of financing."

At the debate, I explained the vivid epiphany this
conversation brought about. Every company has two markets: one for
its goods and services and one for itself. In the boom years the
markets for our companies completely overcame the markets for what
those companies did for a living.

Technology, I said, isn't one bit less powerful or
interesting or useful just because killer stock market
opportunities have dried up. The market for goods and services is
still there, even if there's less funny money to spend on it. I
also said Kevin Maney's mounds in the sand had names like Microsoft
and IBM. For better or worse, I said, those companies aren't going
away soon. Even Sun Microsystems, we learned that morning, has $5
billion in the bank.

Because I was sitting on stage, I wasn't in a good position
to take notes. So I don't remember too many specifics about the
rest of the debate, which really wasn't one as everybody seemed
pretty optimistic about the prospects for technology. Especially
optimistic was Patrick Moorhead of AMD, who insisted that we're
still at an early stage in the development of computing
technology.

Oh, somewhere in there I also said technology was making
consumers a dead species, citing my friend Jerry Michalski's line
about consumers being "gullets who live only to gulp products and
crap cash". The Net brought about a revolution in demand, not only
supply, I said. Customers are far more powerful than ever before.
Vendor emptor.

To close, Gary asked us to name, in as few words as possible,
the technologies we thought would be most important five years from
now. I remember Aaron said something about wireless and mesh
networks. I said I thought there would be two things: one
self-explanatory and the other much less obvious.

The first explains itself in two words: cellular
broadband. Steve Lohr of the Times
nodded as I spoke. Given smart antenna technology, there's no
reason (other than telco stick-in-the-mudheadedness) why we
shouldn't have broadband everywhere we can make a cell connection.
The second was identity services, which allow commerce in the
future to be built on strong Net-native identities controlled by
individual customers rather than by outside authorities.

Although this debate technically wasn't one, the audience
seemed to like it. And we had a truly hot debate the next day with
"The Gold Rush for Intellectual Property: Hollywood vs. Silicon
Valley". How could it not be with
Richard M. Stallman
holding up one end of the thing? I'll cover that one in my next
report.

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